Jurisdiction for Section 138 N.I. Act lies with court where payee's bank branch is located, per Section 142(2)(a)

The SC held that jurisdiction for offences under Section 138 of the N.I. Act lies exclusively with the Court within whose local jurisdiction the branch of the bank where the payee maintains the account is situated, per Section 142(2)(a). Since the complainant's account was with the Kotak Mahindra Bank branch at Mangalore, filing the complaint there was proper. The Magistrate and HC erred by assuming jurisdiction based on a different branch location. The SC set aside the impugned order and allowed the appeal, affirming the territorial jurisdiction as per the amended Section 142(2)(a) of the N.I. Act.

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ISSUES:

Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 can be filed before the Court having territorial jurisdiction over the branch of the bank where the payee maintains the account.Whether the Court's jurisdiction is determined by the location of the drawee bank branch where the cheque is presented or the branch where the payee's account is maintained.The correctness of the Magistrate's and High Court's orders returning the complaint for lack of territorial jurisdiction based on the location of the drawee bank branch.

RULINGS / HOLDINGS:

The Court held that Section 142(2)(a) of the Negotiable Instruments Act clearly vests jurisdiction in the Court within whose local jurisdiction the branch of the bank where the payee maintains the account is situated, and not the branch where the cheque is presented for collection.It was established that the payee maintained his bank account with the Kotak Mahindra Bank at the Bendurwell, Mangalore Branch, and therefore, the complaint was rightly filed before the Court in Mangalore.The Magistrate's order returning the complaint on the ground that the drawee bank was located at Mumbai was erroneous and opposed to the clear mandate of Section 142(2)(a) of the N.I. Act.The High Court erred in confirming the Magistrate's order based on the incorrect assumption that the payee maintained his account at the Mumbai branch.The appeals were allowed, setting aside the impugned orders, and the Magistrate at Mangalore was directed to entertain and adjudicate the complaint cases expeditiously in accordance with law.

RATIONALE:

The Court applied the statutory framework under Section 138 and Section 142(2)(a) of the Negotiable Instruments Act, 1881, as amended in 2015, which governs the territorial jurisdiction for offences relating to dishonour of cheques.The Court relied on the authoritative interpretation in Bridgestone India Private Limited vs. Inderpal Singh, which affirmed that jurisdiction lies where the payee's bank account is maintained, not where the cheque is presented.The Court corrected the factual misunderstanding regarding the location of the payee's bank account, emphasizing that the account was maintained at the Mangalore branch, notwithstanding the cheque's presentation at the Mumbai branch.No dissent or doctrinal shift was indicated; the judgment reaffirmed established principles governing jurisdiction under the N.I. Act post-amendment.

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